Subprime No Political Issue in New Hampshire
Developer Romeo LaCasse is building 51 homes for retirees in a scenic corner of New Hampshire filled with lakes and forests.
He has sold fewer than half but worries little because he has avoided risky borrowing plaguing builders and sellers elsewhere coping with a nationwide real estate downturn.
"If I had this project three years ago, I'd probably be sold out," said LaCasse, 52. "The economy is good, but where are the buyers? It's probably oversupply."
As in most parts of the United States, new and existing homes are selling more slowly and for less in New Hampshire than at the peak two or three years ago.
The state holds the first U.S. presidential primary and is experiencing less panic than once red-hot regions such as Southern California, Florida and Nevada due to fewer risky subprime loans, bankers and real estate agents say.
Appeals by presidential candidates to help clean up the subprime fallout may have less resonance in New Hampshire than in those three states, all of which hold subsequent primaries early in 2008.
New Hampshire's primary is expected in January; the election is in November 2008.
LaCasse put up $3.5 million of his firm's own cash to buy the land and build the infrastructure at his Nature's View development, showing a conservative approach towards banking that has helped weather turbulence in the real estate market.
"I learned my big lesson in the early 1990s with banks," he said, referring to a previous housing downturn. "I vowed to myself that I would borrow very little."
"I'm not going to have somebody knocking on my door saying, 'you owe us money,"' LaCasse said, adding his base home was going for $260,000 rather than the $300,000 it might draw in a robust market.
Traditional Lending Rules Their Roosts
In small towns where commerce still takes place around main street and illuminated red, white and blue poles revolve in front of barbershops, the world of high-tech banking and subprime loans appears far away.
Keith Philbrick, vice-president of the Community Guaranty Savings Bank in Plymouth, said his bank could have made more money during the housing boom had it embraced riskier loans.
But it had kept to traditional rules of mortgage lending.
"The problem with subprime isn't the community banks," said Philbrick, whose bank has a portfolio of about $25 million in real estate loans. "Local community banks do things the old-fashioned way ... That's pretty boring to Wall Street."
Some New Hampshire buyers with weaker credit histories did turn to out-of-state banks for riskier loans, brokers say, a factor in foreclosures that more than doubled to 1,235 homes between January and August this year compared with a year ago, according to real estate newspaper Registry Review.
Philbrick said conservative lending practices, while drawing little attention, bolstered financial stability in small towns. No clients have foreclosed in the last year or two, said Philbrick, a 35-year veteran of the bank.
In some U.S. markets, speculators lured by cheap credit and easy downpayment requirements, bought homes hoping that steady price rises would lead to profits after a quick resale, but less often in New Hampshire.
"Most people here don't buy a house as a speculative investment," said Jim Spanos, a Plymouth broker.
Even as prices have fallen somewhat in the state - some brokers estimated near 10 percent -- many sellers are not desperate to unload their homes even as "for sale" signs proliferate.
Margaret Maney of Meredith, N.H., has had her home built in 1777 on the market six months, and dropped the price from $449,000 to $429,000 (a pool and five acres of land come with the deal). Yet she said she would have no problem waiting another half year as she is only moving to a nearby town to be closer to her children.
"We were hoping it would be quicker but the market is not so good," she said.